If the applicant is able to answer this question correctly, the odds are good that they have some experience working with stored procedures.
A return parameter is always returned by a stored procedure, and it is meant to indicate the success or failure of the stored procedure. The return arameter is always an INT data type.
An OUTPUT parameter is designated specifically by the developer, and it can return other types of data, such as characters and numeric values. (There are some limitations on the data types that can be used as output parameters.) You can use multiple OUTPUT parameters in a stored procedure, whereas you can only use one return parameter.